If there is any one man that the Chinese Army nuclear rocket forces should pin a medal on - it is Bill
Hughes CEO Michael Armstrong wrote President Clinton in 1993, threatening to pull his political and financial support if Clinton did not allow for space technology transfers to China. Armstrong listed numerous issues on which he had supported the president, noting that he needed Clinton's help on the export. Armstrong stated that Hughes would lose jobs in politically crucial California.
"This will be public and political shortly," wrote Armstrong.
In 1994, in return for Armstrong’s support Clinton approved a waiver for Hughes and later for satellite competitor Loral Space to transfer advanced satellite systems to China. Still, even with Clinton's signature, the cumbersome process of getting Defense Department and State Department approval was far too much for Armstrong.
According to a Sept. 22, 1995, State Department memorandum, Secretary Warren Christopher
Armstrong knew the State Department would never allow his exports without detailed oversight and he intended to do something about it. In 1995, Armstrong wrote Clinton National Security Advisor Anthony Lake, seeking to transfer all satellite export authority from the State Department to the much more friendly and ill-equipped Commerce Department.
"The USG [U.S. government] does not require Congressional approval to remove commercial satellites from the United States Munitions List (USML), which is under State Department jurisdiction, and placing them on the Commerce Control List (CCL), which is under Commerce Department jurisdiction," wrote Armstrong.
"It is my understanding that State has resisted vigorously Commerce attempts to do just that. For the national good, this situation must change. A commercial communications satellite is not a defense item. State Department control of satellites is not required for national security. Continued State Department control is damaging to the U.S. satellite industry and is not warranted."
At the same time Loral leap-frogged over Armstrong and took the lead in seeking exports to China. In a September 1994 memo to Bill Clinton, Harold Ickes, then White House chief of staff, informed him that Loral CEO Bernard Schwartz could be used to raise campaign donations “in order to raise an additional $3,000,000 to permit the Democratic National Committee to produce and air generic TV/radio spots as soon as Congress adjourns.”
Ickes then urged Clinton to invite Schwartz to the White House “to impress [him] with the need to raise $3,000,000 within the next two weeks.” In another memo, Ickes informed Clinton that Schwartz “is prepared to do anything he can for the administration.”
Between October 1995 and March 1996, as Clinton mulled over whether to ignore the State, Justice, and Defense Departments’ objections against granting Loral waivers to export advanced technology to China, Loral Chairman Bernard Schwartz injected more than $150,000 into the DNC’s coffers.
However, something went horribly wrong. In February 1996, a Chinese Long March rocket carrying a Loral Intelsat satellite failed and crashed on lift-off. The Chinese intended to launch the Loral satellite into deep space as they had been paid to do by Mr. Schwartz.
However, when the satellites’ remains were recovered it was discovered that a vital computer control board was somehow missing from the space craft. Without the electronics on the missing board the satellite would have failed mysteriously in orbit. Yet, because of the rocket failure, the satellite was recovered nearly intact, except for the missing board.
The missing board from the Loral Intelsat satellite is no mystery. Chinese engineers had removed it and kept the board for examination. The stolen Loral electronics consisted of radiation hardened, encrypted, telemetry chips, stored in a hardened flight control box similar to those found on airliners.
Radiation hardened chips are useful for 3 things, space missions, atomic reactors and nuclear warfare. The fact that they were encryption control chips made it even more sensitive since they could be duplicated and used for military weapons such as nuclear tipped missiles.
While the Loral crash investigation was still ongoing, President Clinton quickly moved the oversight of satellite exports from the State and Defense Departments to the Commerce Department. In response, Armstrong and his counterparts wrote a thank-you letter to Clinton. In a May 3, 1996, letter signed by the CEOs of Hughes, Lockheed and Loral, the three executives expressed their thanks directly to Bill Clinton.
"In October of last year we wrote to you asking you to complete the transfer of responsibility for commercial satellite export licensing to the Department of Commerce. Your administration recently announced its intention to do just that."
"We greatly appreciate this action which demonstrates again your strong commitment to reforming the U.S. export control system," states a letter signed by Hughes CEO Armstrong, Lockheed CEO Norman Augustine and Loral CEO Bernard Schwartz.
With the stroke of a pen, Bill Clinton signed away decades of advanced US missile research and technology. While the Chinese were tearing apart the Loral satellites to obtain advanced electronics, Hughes also made significant contributions toward advancing the Chinese missile efforts.
According to the State Department, the most serious violations occurred when Hughes gave the Chinese Army classified information that supported its analyses of the investigation of the January 1995 failure of the launch of a Chinese rocket carrying the Hughes-manufactured ASTAR II commercial communications satellite.
On Jan. 26, 1995, approximately 52 seconds into flight, a Chinese LM-2E carrying the Hughes APSTAR II communications satellite failed. It was because of this failure that Hughes decided to pass secret missile technology to China. The joint Hughes and Chinese Army crash investigation teams discovered that the rockets’ nose cone had not been properly designed.
In response, Hughes engineers then passed to the Chinese all the information necessary to design a modern nose cone which could deploy a payload into space. Of course, that payload could be a civilian satellite or a nuclear warhead. The Hughes actions led to an investigation and national security violations charges were filed by the State Department.
“Respondents decided to form and direct a launch failure investigation beginning in January 1995 and continuing throughout much of that year. The investigation involved the formation of several groups of leading technical experts from China and the U.S., which throughout the investigation engaged in an extensive exchange of technical data and analysis, producing a wide range of unauthorized technology transfers,” noted the State Department charge document.
The national security charges caused a major upheaval at Hughes. Hughes not only lost its satellite and advanced US technology - it also lost its business. In the end, Hughes was forced to sell off its satellite division to Boeing. Boeing in turn agreed to fire most of the Hughes staff and pay a $32 million fine to the US government for the illegal transfers to avoid being banned from exports.
Loral too suffered from the extensive investigations into the massive transfers of advanced US technology to Chain. Loral was forced to sell off all of its defense and military divisions. The company eventually went bankrupt and then re-established itself as a satellite maker now using
However, the quid pro quo was complete and the Chinese Army went to work with US technology in hand. Improvements in rocket electronics, nose cone design and guidance system assembly obtained directly from Loral and Hughes were quickly applied to the force of nuclear tipped strategic missiles. The technology that Loral and Hughes engineers so eagerly provided was used to improve Chinese nuclear missile accuracy and reliability to near state of the art.
Previous flight test results indicated that almost half of the Chinese missile force would fail due to bad guidance and poor design. The remaining half was so inaccurate that they could miss their intended city targets by hundreds of miles.
Today, the Chinese missile force will perform flawlessly, dropping nuclear payloads within 100 yards of any target on Earth. The Chinese Army has a reliable global nuclear punch with powerful accuracy thanks to Bill Clinton.
CHARLES R. SMITH
CEO FOUNDER OF SOFTWAR INC.
Despite an ongoing FBI investigation into the unauthorized transfer
of advanced missile-guidance technology to China, Loral Space &
Communications Corp. requested and received
Clinton administration approval to sell communications satellites to
Beijing in 1996, a secret National Security Council memo obtained by
Congressional investigators have raised concerns that the satellite
technology shared with the Chinese may have allowed them to improve
their capability of launching intercontinental ballistic missiles. China
currently targets 13 such nuclear-tipped missiles at the United States.
Loral Chairman Bernard Schwartz donated more than
$1 million to the Democratic National Committee, according to Federal
Election Commission records, and has recently made contributions to
Hillary Clinton’s campaign for the U.S. Senate in New York. The $1
million contribution was the single largest individual donation to the
DNC that year.
The July 1, 1996, action memo to National Security Adviser Anthony
Lake, obtained through an intelligence agency source, reveals Loral
requested that President Clinton delay a pending waiver for a satellite
“In mid-June, Globalstar’s parent company, Loral requested that we
temporarily delay evaluation of their request for a national interest
waiver for this project,” the memo explains. “The company has now asked
us to resume processing of their application, and State has confirmed
its support for approval of the license.
“The Dept. of State, with the concurrence of the Departments of
Commerce and Defense and the Officer of Science and Technology Policy,
recommends that the President report to Congress that it is in the
national interest to waive the Tiananmen Square sanctions in order to
allow the licensing of communications satellites and related equipment
for export to China,” states the memo.
President Clinton signed the waiver for Loral later that month.
Loral was then under investigation for the loss of an encryption control
board from a Loral Intelsat satellite that crashed in China. The
missing board prompted an investigation by the FBI.
According to documents obtained from the U.S. Commerce Department,
Loral was aware that the exported satellite systems were developed from
American military equipment. Loral documents obtained from the files of
the late Commerce Secretary Ron Brown included a folder labeled “for
Secy. Brown” with a page titled “Commercial Applications Of DoD
Technology.” The Loral document lists “Intelsat,” “Cellular —
Globalstar” and “Direct Broadcast Satellite” technology along with a
variety of other products developed from Department of Defense projects.
In addition, a 1996 State Department report contradicts Clinton
administration claims that advanced communications exports to China were
“civilian” projects. The report states that the Chinese army was keenly
interested in obtaining Loral Globalstar satellite technology and the
Loral purchase was possibly being financed by Chinese billionaire, Li
Ka-Shing. The 1996 Department report was written by then-Ambassador to
China James Sasser, a former U.S. Senator from Tennessee. The 1996
State Department report was obtained through the Freedom of Information
The report states: “The PLA (People’s Liberation Army) has for some
time been discussing with the MPT (Ministry of Posts and
Telecommunications) the possibility of using frequencies allocated to
the PLA for establishing a mobile phone network based on CODE DIVISION
MULTIPLE ACCESS (CDMA) technology.”
The 1996 report written by Sasser alleges that the Ministry of Posts
and Telecommunications (MPT) and Li Ka-Shing were both directly involved
with the People’s Liberation Army in financing the Loral export to
“Already, foreign companies are interested in the new PLA-backed
entity that is likely to emerge over the next year,” states the report.
“Recent press reports indicate that Hutchison Whampoa may be involved
with the PLA about possible funding options.”
Li Ka-Shing owns Hutchison Whampoa Ltd. and is reportedly the sixth
richest man in the world. Hutchison Whampoa is the shipping company
awarded the contract to control the ports at both ends of the Panama
Li Ka-Shing has been described by intelligence sources as a “Howard
Hughes” for the Chinese Military Intelligence Department, or MID. U.S.
Army Southern Command documents on the Panama transfer noted that Li
Ka-Shing was an “indirect” threat to the United States.
Loral Globalstar satellite cellular phones use a unique
communications technology originally built for the U.S. military called
Code Division Multiple Access (CDMA). The July 1996 waiver signed by
Clinton allowed Loral to export Globalstar CDMA technology to China.
The Clinton waiver also allowed for China to acquire a secure
telemetry control ground station for the Loral Globalstar satellites.
The station is currently operating just outside of Beijing.
Loral’s Globalstar is not the only satellite system under fire for
alleged illegal transfers to the Chinese army. The State Department
recently accused Motorola’s Iridium system of passing significant
missile technology to China.
However, neither satellite system seems to be a big hit with
consumers or Wall Street investors. The ill-fated Iridium satellite
phone system declared bankruptcy last year and now plans to write off
the entire $5 billion space-based system. The extraordinary process of
de-orbiting and destroying the array of 66 satellites is under way as
Iridium operations shut down.
“Iridium was one of the more colossal screw-ups in history,” says
Douglas Humphrey, head of Cidera Inc., a satellite-based Internet
routing company. “The magnitude of the damage is not yet fully
realized. Wait a year or two. Iridium seriously damaged Wall Street
perceptions of satellites.”
According to an article, “Iridium, Overcapacity Worry Space
Industry,” published in Aviation Week & Space Technology, Humphrey
noted the big winners would be Loral and Schwartz.
“There’s not room for three to five Iridium-like systems, only one or
two,” the article noted. “… Bernie Schwartz built the cheap one
(Globalstar) and he will win.”
According to Hoyt Davidson, managing director at Donaldson, Lufkin &
Jenrette Investment Banking, Schwartz is always looking for investment
in his space systems.
“Bernie Schwartz always has a prospectus ready in his back pocket,”
noted Davidson in the Aviation Week article.
WorldNetDaily reported in 1998
that Globalstar, the Loral subsidiary, accepted full partnerships and a
$37.5 million investment by two Chinese government-front companies.
That year, Loral’s Globalstar Limited Partnership division finalized
a deal with China Telecom and CHINASAT, both wholly owned by Beijing’s
Ministry of Information Industry.
“The addition of China Telecom as a full partner solidifies
Globalstar’s commitment to bringing the promise of mobile satellite
communications to China’s 1.2 billion people,” said Schwartz in a public
statement in 1998.
The deal specified that Beijing’s government companies would manage
all Globalstar operations in China, according to Schwartz. With the
world’s largest population and one of the fastest-growing economies, the
deal was estimated to increase Loral’s revenues by $250 million
The telecommunications deal was the result of a meeting between
Schwartz and top Chinese officials made possible by a trade mission
coordinated by then-Commerce Secretary Brown in August 1994. Schwartz
met with People’s Liberation Army Gen. Shen Roujun.
Besides construction, operation and maintenance of a Chinese
telecommunications infrastructure, China Telecom lists among its
specific responsibilities “emergency communication during wartime”; the
construction and operation of government communications networks;
ensuring security in communication; exercising “centralized control over
public satellite communication” and “any duty that may be entrusted by
MPT” (Ministry of Posts and Telecommunications) or the new Ministry of
“Allegations that Space Systems/Loral provided missile guidance
technology to the Chinese are false,” said Schwartz back in 1998. “SS/L
makes commercial communications satellites, not launch vehicles. The
company did not advise the Chinese on how to fix any problems with the
Long March rocket. All company employees were specifically instructed
not to provide any such assistance, and the company believes that its
employees acted in good faith to comply with the strict and complex
requirements of the export control laws.”